RBS agrees $4.9bn to settle USA subprime case

Royal Bank of Scotland called it a

Royal Bank of Scotland called it a"milestone moment

Royal Bank of Scotland (NYSE:RBS) agrees in principle to pay a $4.9B civil penalty to settle a U.S. Justice Department investigation about the mortgage-backed securities the bank issued during 2005-08.

British junior finance minister John Glen said RBS Chief Executive Ross McEwan had informed him of the decision in a recent letter, following pressure from lawmakers to widen the scope of appeals for businesses that suffered as a result of their time in the turnaround unit.

The US Attorney's Office in MA, which led the probe, confirmed it had reached an agreement in principle with RBS that would resolve potential civil claims related to mortgage-backed securities that were issued from 2005 to 2008.

The proposed settlement is still subject to both sides entering a legally binding agreement, RBS said. The company had revenue of $4.59 billion for the quarter, compared to the consensus estimate of $4.76 billion. analysts expect that Royal Bank of Scotland will post 0.8 earnings per share for the current year. But evidence is mounting that US enforcers are willing to settle for smaller penalties to end mortgage probes. Barclays, which settled in March, had the smallest figure at $2 billion.

Obama-era settlements were significantly more costly.

Google's AI can now make eerily human-like phone calls for you
Voice: Google Assistant is now better placed than any time before in the history of human race on earth to mimic the human voice. The tech giant announced that Google will soon debut displays that will come integrated with giant's very own Google Assistant .

LONDON, May 10 (Reuters) - Royal Bank of Scotland's shares rose as much as 6 percent on Thursday after the bank reached a $4.9 billion settlement with USA authorities, opening the way for its privatisation and return of cash to taxpayers who bailed it out in the financial crisis.

Rivals also charged by the DoJ include Citigroup, JPMorgan Chase, Credit Suisse, Morgan Stanley, Goldman Sachs and Bank of America.

The UK government spent £45.5 billion (S$82.7 billion) rescuing the Edinburgh-based firm, then the biggest bank bailout in the world. Sessions argued that such money too often went to groups that weren't harmed by the illicit conduct and had political agendas.

A spokesman for RBS confirmed the new policy. "I'd like to see much of that ploughed into the bank's IT systems", said the investor, who asked not to be named. "We need to think about whether devoting resources to additional enforcement against an old scheme is more valuable than fighting a new one".

RBS had previously set aside roughly $3.5bn for the fine, but many analysts had feared it could be even larger than the $4.9bn provisionally agreed today.

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